Digressive tax, Managerial Economics

DIGRESSIVE TAX

A tax is called digressive when the higher incomes do not make a due contribution or when the burden imposed on them is relatively less.

Another way in which digressive tax may occur is when the highest percentage is set for that given type of income one which it is intended to exert most pressure; and from this point onwards, the rate is applied proportionally on higher incomes and decreasing on lower incomes, falling to zero on the lowest incomes.